Re Leitch, D.H. Ex Parte NZI Capital Corporation Ltd

[1992] FCA 490

!

IN THE FEDERAL COURT OF AUSTRALIA	1
GENERXG DIVISION	1 No. QB 512 of 1992 i
BANKRUPTCY DISTRICT OF THE	1 i
STATE OF OUEENSLAND	1

RE:	DAVID HENRY LEITCH
EX PARTE:	NZ1 CAPITAL CORPORATION LIMITED

MINUTES OF ORDER

E MADE:  BRISBANE \31 "1 DI

1.    Any notice of appeal to be filed and served by 4 p.m. on Honday 6 July 1992.

2.    The Official Trustee make no disposal of any assets of the estate of David Henry Leitch until determination of the foreshadowed appeal or earlier order.

3.   The Official Trustee make no distribution of the estate of David Henry Leitch until determination of the foreshadowed appeal or earlier order.

4.    David Henry Leitch to file with the Official Trustee a statement of affairs by 4 p.m. on 9 July 1992.

5.    The solicitors for David Henry Leitch convey direction number 4 to Mr. Leitch.

THE COURT ORDERS THAT:

NOTE:	Settlement and entry of orders is dealt with in
Rule 124 of the Bankruptcv Rules.

6.   The order of Deputy Registrar Allen of 20 March 1992 that the sequestration order not be signed and sealed is discharged.

7.  The petitioning creditor's costs in respect of the application for a stay or a suspension of the sequestration order to be its costs in the foreshadowed appeal. If no notice of appeal is filed by 4 p.m. on Monday 6 July 1992, the petitioning creditor's costs on the application for a stay or suspension of the sequestration order to be taxed and paid as if they were petitioning creditor's costs on the petition.

IN THE FEDERAL COURT OF AUSTRALIA	1
GENERAL DIVISION	) No. OB 512 of 1992
BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

RE:	DAVID HENRY LEITCH
EX PARTE:	NZ1 CAPITAL CORPORATION LIMITED

CORAM:	Spender J.
PLACE :	Brisbane
DATE :	25 June 1992

EX TEMPORE REASONS FOR JUDGMENT

After giving my reasons for declining to review a decision by a Deputy Registrar to make a sequestration order against the estate of Mr David Henry Leitch (which order was made on 28 February 1992), counsel for M r Leitch sought that I suspend the operation of the sequestration order pursuant to 37(1) of the Bankruptcy Act (1966) ('the Act'). Alternatively, counsel for

Mr Leitch sought, pursuant to S. 52 (3) of the Bankruptcy Act,

that I stay all proceedings under the sequestration order for a

period not exceeding 21 days.

There is power in the event an appeal is brought under S. 24 of the Federal Court of Australia Act 1975, to apply the provisions of 0. 52 X. 17 of the Federal Court Rules, which give a discretion unlimited as to time. So there is power, relying on that rule, to give a stay for a period longer than the 21 days of which S. 52(3) speaks.

I will not make any order as sought on behalf of Mr Leitch. I propose to give directions concerning the administration of the estate, of a limited kind, which will have the effect of preventing events which might be difficult to reverse should the proposed appeal be successful. But subject to those directions, and subject also to directions requiring Mr Leitch to comply with his obligations, the circumstances of this case are not such as lead me to make either of the orders sought.

On the question of suspension, no application to suspend the operation of the sequestration order was made at the time it was pronounced. The order has not as yet been perfected by signing and sealing.

The consequences that flow from that position are referred to by Von Doussa J in Re Cavanash: Ex parte Cavanash v. Bank of New Zealand (1990) 22 F.C.R. 124; (1990) 98 A.L.R. 217. As his Honour makes plain, the order is effective from the date of its pronouncement, and a suspension of that order not having

been ordered at the time of its making, the consequences that	flow from the making of a sequestration order have happened. In
particular, the divisible property of the bankrupt has vested in the Official Trustee as the trustee of his estate, and, further, Mr Leitch was obliged to comply with the requirements of the Act. The application now is to suspend an order that has been in operation since 28 February 1992.
There is doubt whether it is possible at this later time, because of sections such as 43(2) and 58(1) of the Act, to obtain a suspension of the operation of the sequestration order under S. 37. A stay of proceedings under S. 52(3) does not stay the operation of ss. 43(2) and 58(1).
I refer also to the observations of Neaves J in Re Wardle: Ex parte Widin v. Australia and New Zealand Bankinq Group Ltd (1987) 70 A.L.R. 633, particularly at 635, and to the observations of Drummond J in Storev v. Bolton, an unreported judgment of 4 June 1992, particularly at page 23 and following.
As to the question of stay, I am conscious of the observations of Pincus S. in Evans v. Heather Thiedeke Group Ptv Ltd (1990) 95 A.L.R. 424. But in this case there are considerations militating against the grant of any stay. It seems to me to be a case where it would be desirable that the location and identification of assets be pursued efficiently and promptly.
I direct that the Official Trustee, until the determination of the proposed appeal or earlier order, make no
distribution from that estate. Other than those directions it disposal of any assets in the estate of Mt Leitch, nor make any
seems to me to be proper for the Official Trustee to proceed with his obligations as trustee of the estate of 14r Leitch.
I have considered whether I ought to extend the order made by Deputy Registrar Allen that the sequestration order not be signed and sealed. In my opinion, that order should be discharged so that the sequestration order made by Deputy Registrar Allen on 28 February 1992 might be promptly perfected.
I note the orders made by Cooper J. on 7 April 1992, and in particular his direction that the applicant, without prejudice to the application then before him or the bankruptcy generally, file his statement of affairs on the trustee within ten days.
I note that Cooper J. directed that the sequestration order not be signed and sealed until determination of 3 l r Leitch's earlier application; there is thus no impediment to the signing and sealing of the sequestration order of Deputy Registrar Allen on 28 February 1992.
Finally, I refer to the submission made on behalf of the supporting creditor, Natwest Australia Bank Limited, that consistent with the judgment of Young J. in m v. Jackman [l9861 7 N.S.W.L.R. 97, I should not entertain this application for a suspension or stay of the sequestration order.
I heard the application d6 bene esse, and in the light of the conclusions I have reached, it is unnecessary to consider in further detail whether there is a discretion to hear a party against whom an allegation of contempt has been levelled, and in respect of which there is evidence suggesting, at least on a prima facie level, that the applicant for the stay or suspension is in contempt of the court's orders.

There is a conflict in judicial opinion between the opinion of Young J. in the case I have referred to, and that of Bignold J. in Woollahra Municipal Council v. Shahani (1990) 69 LGRA 435. Both those authorities refer to Borrie and Lowe, Law of Contem~t 2nd ed. (1983), which favours the wider view of

the court's powers, ref lected in the judgment of Denning L.	J, in
Hadkinson v. Hadkinson [l9521 P. 285.

Young J. felt constrained by the judgment of the Court of Appeal in Permewan Wriqht Consolidated Ptv Ltd v. Attornev- General (NSW) ex re1 Franklin's Stores Ptv Ltd (11 December 1978, unreported) to reach the conclusion that he did, although he expressed the view that the contrary, opinion was greatly attractive, and seemed to be realistic, modern and sensible.

1 am not so restrained, and as at presently advised, my view is that this court has an over-riding discretion whether to hear a party or not, notwithstanding that there is prima facie evidence that that party who seeks to be heard is in contempt.

However, in the light bf the conclusion I have come to on the merits of the application sought to be made by Mr Leitch, it is unnecessary to express a concluded view concerning the matters raised by Mr Lilley, counsel for Natwest Australia Bank Limited.

I decline to grant the relief sought. I direct that the Official Trustee make no disposal of any of the assets of the estate of David Henry Leitch, and that there be no distribution

of that estate until the determination of the foreshadowed appeal, or earlier order. The notice of appeal, if any, is to be filed and served by 4 p.m. on Monday 6 July 1992.

I direct that David Henry Leitch file with the Official Trustee a statement of affairs by 4 pm on 9 July 1992. I direct that the solicitor for Mr Leitch convey to his client that direction.

It seems to me that the petitioning creditor's costs in respect of the application for a stay should be its costs in the foreshadowed appeal.

If no notice of appeal is filed by 4 p.m. on Monday 6 July 1992, then the costs of the application for a stay or a suspension of the sequestration order are to be taxed and paid as if they were petitioning creditor's costs on the petition.

I	cert ify t h a t	t h i s	and	t h e
p r e c e d i n g	f ive	( 5 ) pages	a r e	a

t r u e copy of t h e r e a s o n s f o r

judgment	h e r e i n o f t h e Honourable
M r J u s t i c e Swender.	/

- l.[+-- Assoc i t e

Date : 25 June 1992 L'

J

Counsel for the applicant	M2 J. Curran
instructed by	Cleary & Hoare
Counsel for the respondent	M2 A.P.F. Ryan
instructed by	Holmans
Counsel for the supporting
creditor	I& R. Lilley
instructed by	Sly & Weigall, Cannan & Pet erson
Date of Hearing	25 June 1992